JOE COLE was last night set to rejoin West Ham on a free transfer after Liverpool agreed to a £3million golden handshake to facilitate his departure.

The former England international was undergoing a medical at Upton Park after striking the massive pay-off with the Anfield club.

Despite the outlay, Liverpool will save around £4m as Cole had 18 months left to run on a contract worth £92,000 a week.

Cole had been a loan target for Harry Redknapp’s QPR, with a view to a permanent deal, but a return to West Ham proved too appealing.

The Hammers had to strike a permanent deal as Premier League rules prohibit clubs from signing two players on loan from the same side and Sam Allardyce already has Andy Carroll.

Liverpool will save around £4m as Cole had 18 months left to run on a contract worth £92,000 a week

That meant Liverpool had to discuss a severance deal for Cole tomove back there. His exit will draw a line under a miserable, and expensive, spell on Merseyside following a free transfer from Chelsea in the summer of 2010 which was punctuated by a season at French side Lille.

Cole scored five goals in just 42 appearances for Liverpool but is likely to earn about £50,000 a week at West Ham and will be eligible for their FA Cup clash with Manchester United. He made his debut for the club, when managed by Redknapp, against Swansea as a substitute in a third-round tie 14 years ago.